Wednesday, July 05, 2017

Moody's throws curveball into Illinois state budget debate

Crain's Chicago Business reports:
Moody's Investor's Service has thrown a bit of a curveball into efforts to pass the first state budget in three years, suggesting that Illinois still might hit junk level despite an income tax hike that's part of the deal.

As Illinois House members prepare to return to Springfield to override Gov. Bruce Rauner's veto of the budget package, Moody's issued a somewhat unusual statement. The ratings agency said it's continuing to review the state's current Baa3 level for a possible downgrade despite "legislative progress towards a fiscal recovery plan based on permanent income tax rate increases."

First, the House has to override the governor's veto, Moody's said, though it conceded that is likely. Then there's "the likelihood of further deterioration in Illinois' most pressing credit challenges: its severely underfunded pensions and a backlog of unpaid bills, which has doubled during the past year."
The struggles of Blue America.